Microsoft buys 800+ AOL patents for $1 billion

AOL's shares shot up roughly 37% following reports on April 9 that the ink is drying on a deal to sell Microsoft Corp. more than 800 patents for $1.056 billion, AOL confirmed to Direct Marketing News on April 9.

Microsoft will also receive non-exclusive license to 300 additional patents and applications from AOL, meaning AOL retains the right to continue to use the patents in that portfolio and to sell access to other parties. These include core and strategic technology patents and patent applications in the areas of advertising, search, content generation and management, social networking, mapping, multimedia/streaming and security, among others.

The sale was concluded after what AOL's chairman and CEO Tim Armstrong referred to in a release as “a robust auction process.” The details of the auction process itself were under wraps, as all parties signed binding nondisclosure agreements, said an AOL spokesperson.

AOL's plan is to return a large segment of the sale proceeds to its shareholders.

The transaction is expected to be completed by the end of 2012. According to reports, if the deal falls through, Microsoft will owe AOL a $211.2 million termination fee.

News of the AOL/Microsoft deal comes on the heels of Yahoo suing Facebook for allegedly infringing on 10 patents related to methods and technology for adverting, privacy, customizing user experiences, social networking and instant messaging.